With the AEI completed, CPCA has added 12 new rooms of which two are suites and 10 are premier pool rooms, taking inventory to 575 rooms. The pool rooms have a resort feel as they overlook a large swimming pool with water features. Together with the new suites, CPCA has 29 suites to cater for longer staying guests. The new suites have additional features such as washing machines. The new premier rooms are likely to command higher prices.
In August last year, OUE (SGX:LJ3
) Commercial REIT (SGX:TS0U) ’s (OUE C-REIT) manager announced an asset enhancement initiative (AEI) for Crowne Plaza Changi Airport (CPCA) for $22 million. The return on investment (ROI) is estimated at around 10% based on OUE C-REIT's estimated capital expenditure of up to approximately $14 million. OUE C-REIT expects the AEI to be DPU-accretive.
At that time, OUE C-REIT’s manager viewed this was a better use of funds than acquisitions as interest rates were rising. In general, REIT managers viewed acquisitions cautiously because of a negative carry where the cost of debt was higher than property yields. Partly, the AEI transformed unused space into additional guest rooms.
